In October 2024, the UK Government introduced the Employment Rights Bill 2024-25. Here, we take a look at the plans to be implemented by the Bill, and how these will directly impact the construction sector.

What is the Employment Rights Bill 2024-25?

The Employment Rights Bill is pitched by the UK Government as ‘the biggest upgrade to employment rights for a generation’. Enhanced productivity and sustainable, inclusive and secure economic growth are key drivers behind the legislation. The aim is to raise living standards and achieve better support for businesses.

Limited company contractors are not affected by the Bill, and not all the rules apply to temporary  agency workers who are on an agency payroll. Permanent employees, and employees of umbrella companies working on temporary engagements, are affected by the Bill.

Highlights of the Bill include:

Workplace flexibility for enhanced job security:

• Banning zero hours contracts, which are widespread in construction and considered to be exploitative, and replacing them with rights to guaranteed hours, reasonable notice of shifts, and compensation if a shift is cancelled at short notice.
• Eliminating ‘fire and rehire’ dismissals when an employee is fired and then rehired on less lucrative or favourable terms.
• Strengthening collective redundancy rights by ensuring employers consult and notify trade unions or employee representatives when 20 or more redundancies are expected, so that redundancies are considered across the entire workforce, not just at a particular site.
• Providing a ‘day one’ right to protection from unfair dismissal.

Commenting for a Contractor Umbrella article, Tania Bowers, Global Public Policy Director at the Association of Professional Staffing Companies (APSCo), said: “…the introduction of day one rights has the potential to hinder hiring. Risk-averse employers may look at methods of pushing the risks onto others in the supply chain, such as staffing companies, which places these businesses in a difficult position.”

Family friendly rights:

• Providing a ‘day one’ right to paternity leave and unpaid parental leave.
• Allowing unpaid bereavement leave.
• Protecting pregnant women from dismissal, and extending this protection for six months after she returns to work.
• Adapting the current ‘day one’ right to ask for flexible working by obliging employers to explain their reasons for refusal.

Flexible working in construction is now under the spotlight, particularly for increasing the number of women joining and remaining in the sector. This shift aligns with research conducted over recent years, such as that referred to in a 2022 Construction Leadership Council article. It challenged the perception of frontline site-based construction roles being incompatible with flexible working: “A pioneer project demonstrated that flexible working can be implemented on construction sites, without negatively affecting budgets or delivery. It also highlighted the positive impact of flexible working on workers’ sense of wellbeing and work-life balance.”

Other highlights:

• Extending access to Statutory Sick Pay by removing the lower earnings limit and waiting period, making it available from ‘day one’.
• Introducing greater workplace accessibility for trade union representatives, and a duty for employers to inform workers that they have a right to join a trade union.

Unsurprisingly, the TUC has reacted favourably to the bill: “As well as clamping down on bad bosses, the Bill will also give workers a stronger voice at work. And crucially, it will make it easier for workers to benefit from union representation.”

• Enforcing the National Minimum Wage via the Fair Work Agency, a new agency that has been introduced to oversee employment rights.
• Strengthening employers’ obligations to prevent sexual harassment, and harassment of employees by third parties, through preventative steps.
• Strengthening gender pay gap reporting to reflect outsourced workers.

Why was the Employment Rights Bill introduced?

The UK Government states: “Our Employment Rights Bill will ban exploitative zero-hours contracts, end fire and rehire, and introduce basic employment rights from day one.”

As such, the Bill was introduced to address critical employment concerns, many of which apply to the construction sector:

• Worker/contractor insecurity: Zero-hours and temporary contracts are common across the construction sector. The Bill is aimed at minimising job insecurity which will directly affect retention rates and standards of living.

• Mental and physical wellbeing: Immediate access to sick pay and flexible working arrangements will create an enhanced work-life balance and improved health and wellbeing.

• Exploitation: The elimination of exploitative engagement methods, such as ‘fire and rehire’ and one-sided zero-hours contracts, will provide construction workers and companies that are committed to fair practices with much needed stability.

• Union endorsement: Strengthening the role of trade unions in securing the rights of construction workers will provide much needed support, resulting in a more level playing field across the construction sector.

How will the Employment Rights Bill benefit employers in construction?

With the new measures streamlined across the construction sector, the TUC argues that decent employers will no longer be undercut by unscrupulous bosses, which is good for business. A national survey by Opinium for the TUC of over 1,000 employers, found that a clear majority of employers support strengthening the rights of workers and specific government policies.

Anticipated benefits for construction employers include:

• Improved worker retention rates due to better working conditions and job security, which directly impacts the continuation of projects and a reduction in recruitment and training costs.
• Enhanced productivity and safety on construction sites, because a happy workforce is naturally more committed to being productive and operating safely, which reduces project delays and the impact of avoidable accidents.
• A reduced labour gap and skills shortage which have dogged the construction sector for several years. According to PCB Today, the number of construction workers in 2024 has fallen by 14% since 2019. Offering better protections and conditions makes the construction sector more appealing to workers and apprentices.

How will the Employment Rights Bill disadvantage employers in construction?

Anticipated challenges of the Employment Rights Bill for construction employers are:

• More potential for industrial action due to the enhanced influence of trade unions which will affect project continuity.
• Spiralling operational costs that will be needed to cover wider access to Statutory Sick Pay, parental leave, bereavement leave, and the eradication of zero-hours contracts. The cost of apprenticeships will also increase in line with minimum wage rates.

An article in HR News cites a study by Witan Solicitors that found: “For the construction industry, where 41,000 workers are employed under zero-hour arrangements, the average weekly wage is higher [than hospitality] at £773. The total cost of transitioning these workers to fixed contracts could be a staggering £1.65 billion.”

• Flexible working will create scheduling headaches. For a sector that relies on meeting targets and fixed schedules, flexible working could complicate construction project timelines.

What happens next?

The Employment Rights Bill 2024-25 will be subject to a phased implementation .

Following the introduction in 2024 of ‘day one’ rights for unfair dismissal and parental leave, and the right to request flexible working, the ban on exploitative zero-hours contracts and enhanced sick pay will come into effect in 2025.

2026 will see the establishment of the Fair Work Agency and full enforcement of all directives including the eradication of ‘fire and rehire’ practices.

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